Automakers to Trump: Higher tariffs would affect consumers, jobs

President Trump‘s fresh tariffs on $34 billion in Chinese goods set the stage for price increases hitting American companies and consumers. So how does it affect the everyday American? We explain.
USA TODAY

Ford CEO James Hackett and President Donald Trump during a meeting with automotive executives in the White House, Friday, May 11, 2018, in Washington.(Photo: Evan Vucci, AP)

WASHINGTON — Domestic and foreign automakers are sending President Donald Trump a message on his proposal to tax imported autos and auto parts: Don't.

Two days before a Thursday hearing at the U.S. Department of Commerce on the proposed tariffs, seven trade groups — whose members include General Motors, Ford, Fiat Chrysler and other companies they say represent some 10 million auto-related jobs in the U.S. — sent an open letter to Trump asking him to avoid raising taxes on imported autos and parts.

"Raising tariffs on autos and auto parts would be a massive tax on consumers who buy or service their vehicles — whether imported or domestically produced," said the letter, which was also to appear as a paid advertisement Wednesday and Thursday in the Wall Street Journal and POLITICO and on media websites in the Washington, D.C., area.

"These higher costs will inevitably lead to declining sales and the loss of American jobs, as well as increasing vehicle service and repair costs that may result in consumers delaying critical vehicle maintenance," said the ad, titled "A Letter to President Trump from the Auto Sector."

The ad and letter were produced and signed by the Alliance of Auto Manufacturers, the American Automotive Policy Council, the Auto Care Association, the American International Automobile Dealers Association, Global Automakers, the Motor & Equipment Manufacturers Association and the National Automobile Dealers Association.

Taken together, the groups include Detroit's automakers as well as international automakers doing business in the U.S. including Toyota, Honda, Hyundai and Volkswagen. The groups also include parts manufacturers and dealerships.

As they have argued already to Commerce Secretary Wilbur Ross, the groups believe that tariffs on imports would drive up costs, making production more expensive even for domestically made vehicles. Trump has proposed raising tariffs on national security grounds, including against longstanding American allies including Canada, Mexico and the European Union nations.

North America's auto production often includes as many as a half-dozen trips across either the northern or southern border because of domestic automakers' integrated supply chain with Canada and Mexico.

In their letter, the groups said they recognized that Trump is "a strong advocate for America's auto sector and dedicated to creating more auto jobs." But they cautioned him against "the possibility of increasing import tariffs on autos and auto parts, including imports from countries where we have had long-standing, mutually beneficial trading relationships.

"While we understand that you are working to achieve a level playing field for trade to create more jobs, raising tariffs is the wrong approach," they said.

Contact Todd Spangler at 703-854-8947 or at tspangler@freepress.com. Follow him on Twitter at @tsspangler.